Eric Weinstein on Inequality

Interviewed by Sean Illing for Vox. A couple of excerpts:

I believe that market capitalism, as we’ve come to understand it, was actually tied to a particular period of time where certain coincidences were present. There’s a coincidence between the marginal product of one’s labor and one’s marginal needs to consume at a socially appropriate level. There’s also the match between an economy mostly consisting of private goods and services that can be taxed to pay for the minority of public goods and services, where the market price of those public goods would be far below the collective value of those goods.

Beyond that, there’s also a coincidence between the ability to train briefly in one’s youth so as to acquire a reliable skill that can be repeated consistently with small variance throughout a lifetime, leading to what we’ve typically called a career or profession, and I believe that many of those coincidences are now breaking, because they were actually never tied together by any fundamental law.

. . .A friend of mine said to me, “The modern airport is the perfect metaphor for the class warfare to come.” And I asked, “How do you see it that way?” He said, “The rich in first and business class are seated first so that the poor may be paraded past them into economy to note their privilege.” I said, “I think the metaphor is better than you give it credit for, because those people in first and business are actually the fake rich. The real rich are in another terminal or in another airport altogether.”

Pointer from Tyler Cowen.

I would describe the interview as a set of very interesting threads, which to my frustration are left dangling. I don’t know whether the fault lies with Eric, the interviewer, or the editor.

21 thoughts on “Eric Weinstein on Inequality

  1. He comes off a lot better in the 3-4 different podcasts I’ve heard him on than in that interview. My guess is Vox is to blame.

    • Unfortunately, the blame goes all around. If the direct quotes are anywhere near accurate, Weinstein was sounding uncharacteristically and disappointingly silly, “… but this is where the issue of some kind of hybridization of hypercapitalism and hypersocialism must enter the discussion.”

      Come on, that’s a bunch of made-up gibberish that’s just supposed to sound cool and deep but which has no actual foundation or novel insight. I’d bet he can’t explain how that’s different from the mundane concept of a “mixed economy.” Sad.

      This is the point where one gets caught in the post-modern trap of it being simultaneously portrayable as unsophisticated to take what someone says at face value without understanding “the game” they are really running, which is supposed to reveal one as naive and out of the loop, while at the same time being portrayable as offensive and insulting to accuse someone of running a game. “I’m offended that you would question my integrity” – “But you have to say that, as part of the game.” And so on. Sigh.

      Nevertheless, with nothing else to go on but this transcript, j’accuse, and one has to conlcude that Weinstein was playing the media game of trying to prevent any crimethink-stink from sticking to him because of the IDW stuff, and to prevent the left press like Vox from painting a target on his back and exiling him to intellectual Siberia like Charles Murray, by throwing them a bone on the “More Socialism is the Solution!” stuff they want to hear, and which they want to put out there as authoritative consensus and something that all very smart people are certain is true if they are being honest, even if they aren’t progressives.

  2. Like you this is very simplified version of class warfare and misses a lot of realities. And also I see a bit of the Andy Griffin syndrome here and the decline of class struggles of the US of 1950 – 1970 was probably a historical outlier due to WW2 and the early Depression Baby Bust that caused a low labor supply for a time period. The job growth during the Eisenhower and Obama administration were almost equal around ~1.2% annually which is amazing considering Obama dropped so much 2009 – 2010.

    1) I work with a lot people in first class and they work exceptionally hard and not any kind of idle class. (One year I was in their situation of lots of travel.)

    2) I am hearing lots of complaints about labor shortages and employers reversing Sanders minimum wage employers deserve to have quality workers at a fair wage. Employers are going to have to figure this out.

    3) In terms of the fault lies, maybe it is numerous things. Wages of non-managerial males workers have not had a major increase since 1974 in real wages but that could be: Automation, Japan/China/India Middle Class wage growth, Oil Prices, Immigration, Education Signaling, The Baby Boom job creation of the 1970s, etc. (I say all of them but the Baby boom job creation of the 1970s is under-rated in opinion. considering the highest job creation decade was the 1970s. I believe more jobs were created during Carter than either Reagan administration.)

    4) Probably the highest issue of the developed world is the rising Health care expense and the falling Family Formation. (having a kid with cancer makes wonder why anybody has children without being married or health insurance is beyond me.) Across the globe, the baby bust is accelerating (Africa fertility are dropping a lot here) and it seems like issue for the second half of the 21st century will be the richer the world is the less they can afford children. Basically the conservative cries of lack of babies will be louder.

  3. “… one’s marginal needs to consume at a socially appropriate level.”
    “…where the market price of those public goods would be far below the collective value of those goods.”

    Who gets to decide what “socially appropriate” and “collective value” mean?

  4. “The modern airport is the perfect metaphor for the class warfare to come.” And I asked, “How do you see it that way?” He said, “The rich in first and business class are seated first so that the poor may be paraded past them into economy to note their privilege.”

    We live in a country where the ‘poor’ get paraded in front of the ‘rich’ right before they sit on the safest and fastest known form of commercial travel known to man throughout all time and sail through the air traveling hundreds of miles an hour before landing in virtually any country in the world and the notable part is that “poor people see that rich people have it slightly better”.

    Its a great metaphor because modern class warfare relies on symbolism, not reality. Either the framing of the debate to make a wonderful thing seem repugnant or a rare example held up as the norm. You need a metaphor for class struggle these days because you can’t find the actual struggle.

    • I was also a bit taken aback by that statement. The airport?

      We are not talking about a Hobbesian war of each against all, pitiless to the weak, with no mercy shown to the defeated.

      We are talking about people sitting calmly in an airport, minding their own business, secure in their persons and possessions, and then getting on airplanes and flying to their destinations. As as bacon-bacon points out, a form of technology that is new and moderately available to the masses, at least in a country like the USA where it is common for persons of relatively low incomes to have flown at least once, paying their own way.

      Methinks somebody needs to go back and read Schumpeter’s _Capitalism, socialism, and democracy_ , or “Southey’s Colloquies,” and think about what technological progress and cheap consumer goods have brought the ordinary person

  5. I imagine nobody thinks of US airline seating customs as veiled as price discrimination that actually subsidizes fares for everyone else but I have to think that is a more rational explanation. That said, props to Brazil and other countries where the custom is to load from the back. It sure does make loading smoother and quicker and if you have paid for 1st class it means less time sitting on the plane.

      • I suspect that boarding planes is slow and annoying because 1. It reakky makes no difference if you speed it up, airplanes will have the same wheels-down time regardless due to other requirements and constraints, and 2. They can extract some extra money from some people willing to pay to skip the crazy welter that is members of a half dozen different groups jumbling up in a confused mass waiting for their turn.

        There’s some behavioral psychology that also says that people don’t mind waiting as much if they feel they are moving or things are happening, however slowly, and prefer that to sitting around waiting, doing nothing.

        Another airport example that illustrates this is the question of where to put the baggage claims. If you put them really close to the plane, then people will get there long before the bags, and they will get upset waiting with nothing going on. So it’s better to put the baggage claim a long walk away, to give the bags time to get there. Even though it takes the same aggregate amount of time, people feel that the bags get there only shortly after they do, which takes away the opportunity for stewing in idle irritation.

    • I imagine one of the reasons for seating 1st class first is to forestall having to evict an interloper who tries to steal one of the seats.

    • I believe the real scarce resource driving the load-from-front order is the amount of overhead-bin storage for carry-ons. When I’ve flow on a full airplane, I have seen the staff make people put their carry-ons into whatever bins still have space, even if very far from the person’s seat.

      If you load the expensive classes first, they get first access to the bins near their seats.

      If you load the cheap class first, the bins above the cheap seats will fill up and then the cheap people would over-flow to the bins over the expensive seats. In such a case, the late-loading expensive class people would find that they did not have as much space — or any — for their carry-ons.

  6. The worst part of that interview was the interstitial subheadings that misrepresented Weinstein’s expressed opinions.

  7. Everyone is on the same plane, however. Which might be the point he’s making about fake rich, but that’s not the story I’d tell.

    It is better than having Pharaohs.

  8. The big idea here is not the references to class issues.

    It is the idea that a set of coincidences were in place during the early evolution of capitalism that allowed markets to form and clear, and that those coincidences are deteriorating. If Weinstein is right, and I think he is, we have some very difficult problems to solve, and no obvious way to solve them.

    @Dave Smith- “It is better than having Pharoahs”

    No, its worse. The new Pharoahs won’t even need slaves to drag stones.

  9. On the one hand, Weinstein says, in effect, let the market handle it:
    “I believe capitalism will need to be much more unfettered. Certain fields will need to undergo a process of radical deregulation in order to give the minority of minds that are capable of our greatest feats of creation the leeway to experiment and to play, as they deliver us the wonders on which our future economy will be based.”

    That’s all to the good. But then laced throughout his answers are references to a need for the collective “we” to come up with solutions:
    “What we’ve never considered is how to move an entire society, dominated by routine, on to a one-off economy in which we compete, where we have a specific advantage over the machines, and our ability to do what has never been done.”

    “Part of the question is, how do we disable an educational system that is uniformizing people across the socioeconomic spectrum…”

    “What we don’t know yet is how to pay people for those behaviors, because many of those screenplays and books and inventions will not be able to command a sufficiently high market price…”

    “I think we’re going to have to augment … hypercapitalism… ”

    Hopefully, he’s not using the word “we” as a placeholder for government, but in terms of millions of people using their freedom to independently try different things, fail, try again, and (occasionally) come up with something that works.

    • Its always much easier to express interesting insights about a major social challenge than it is to come up with a coherent solution. Weinstein’s prescriptions made no sense.

      There is zero chance that a market for strictly creative labor supplied by the majority of citizens can reach an equilibrium. It was an odd thing to propose.

    • I’m pretty sure Weinstein is right on some points; exponential growth always runs into some hard limit (usually environmental) and levels off. The economy is no exception.

      He dramatically underestimates the degree of social change that would result. A world without economic growth is a world where most people can’t hope to do better than their grandparents. The American Dream was always more material than ideological; the hope for advancement is a load-bearing part of our social structure.

      Liberty is great for finding opportunities but also very wasteful; most innovations don’t work. In a post-growth world with few new opportunities to find, the advantages of government and coordination are likely to exceed those of liberty in many ways.

      @Tom: While I’m sure there is an equilibrium price for strictly creative labor from the majority of citizens, I agree that that price would not allow the majority of citizens to survive. Very few people get rich off of Youtube.

  10. I am the only one unafraid to say I have no idea what Eric Weinstein is talking about half the time? I find most of his arguments make little sense and are based on assumptions nobody seems willing to challenge. Is it worse for you not to know what you’re talking about or for nobody else to know what you’re talking about? Or maybe there’s no difference between the two.

  11. I found it interesting that he suggested human beings specialize in non-routine projects.

    flipping houses is one example for better or worse.

    movies is another.

    A third is writing novels, creative works, etc. This immediately made me think of the UK’s tax exiles. If my memory serves me correctly, someone (Robert Graves?) became a tax exile because the UK tax code did not favor people who produced a great creative work every year or two or three or four. He went to…Mallorca? France? Wikipedia says Mallorca.

    At a certain point a large percentage of the UK’s artistically successful persons became tax exiles. Methinks Graves was one who explained to the public why everyone was doing it.

    • Graves got to Mallorca very early, so my explanatory drive is way off. But he still might be one of the artists I have in mind who articulated the point: “Sometimes you can have a livelihood where you make a decent income once in a while. Not all tax codes favor such a business model.”

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